Zain takes majority stake in Paltel

Amman, May 18, 2009

Kuwait's Mobile Telecommunications Company (Zain) has bought a 56.3 per cent stake in Palestine Telecommunication Company (Paltel) in a share swap that gives it majority control, according to company board members.

The mobile operation in Palestine currently known as ‘Jawwal’ will be rebranded to Zain by the end of 2009, the members added.

This mobile operation will also join Zain’s renowned ‘One Network’ platform, taking to 19 the number of countries that benefit from One Network’s many advantageous roaming offerings.

Through this transaction, Palestine will become the 24th territory in which Zain will have a commercial footprint, the members added.

The combination of both Zain Jordan and Paltel will produce a business group which will generate over $1 billion of revenues, $450 million in Ebitda and $300 million in net income in 2009 alone, said a top official.

Additionally it will result in significant synergies and efficiencies in Capex and opex spend and purchasing power, all of which will improve the profitability position of the group in line with Zain’s newly implemented ‘Drive11’ transformation program.

“A merger of this nature, with immediate opportunities for synergies between the two leading operators in Jordan and Palestine, will create substantial value for shareholders and enable us to create a strong operating platform for our businesses in the Levant and beyond,” said Dr. Saad Al-Barrak, Zain CEO after signing the deal in Amman on Monday.

“We have enduring faith in the Palestinian economy and are totally committed to future development of its telecom sector. This deal will play an instrumental role in supporting our 2011 ambitions of being a top-ten global mobile operator,” he added.

Paltel, with a base of 1.5 million active mobile customers and over 363,000 fixed line customers, as well as approx 78,000 ADSL customers as of March 31, 2009, has, since its establishment, demonstrated strong growth, resilience and an enviable track record in fixed and mobile voice, data and value added services.

Zain Jordan, with over 2.35 million active mobile customers, has pioneered award-winning voice, mobile broadband and data services in the Jordanian market.

Working together, both operators will be in a position to bring innovative services with wide-market appeal to Jordanians and Palestinians alike, strengthening the already entrenched positions of both operators in their respective markets.

'This partnership with a foreign strategic operator such as Zain represents a strong endorsement of the Palestinian economy and its capital market,' said Sabih Al-Masri, chairman of Paltel.

'This development will restore investor confidence in Palestine and is a proof point that the telecom sector is still buoyant and growth oriented. It also marks a new chapter in our business operations as we prepare for the upcoming market liberalization in the mobile telecommunications sector in Palestine,' he noted.

“We are very pleased that we have now established a strong partnership with Zain, enabling us to leverage its unique products and services, and enjoy synergies with Zain’s operations in the areas of branding, joint procurement and purchasing power, human resources and more efficient access to debt and equity capital markets, Al Masri explained.

Under the framework of a strategic management agreement and branding/intellectual property agreement, Zain will bring its experience in managing international operations to Paltel, aligning the Paltel operations with Zain’s global ACE strategy, incorporating its unique value propositions such as ‘One Network’, mobile-banking services and ‘Zain Create.’

'With access to the One Network, mobile banking and other services, we will be in a position to enhance the customer offering and experience to millions of Palestinians both at home in the West B